Palladium Group has recently published their “Global State of Strategy and Leadership Survey Report” . The report is based on the research conducted within 1,266 organizations worldwide. The results give an idea about the general strategy execution climate today and how executives perceive current market changes. Here are some of the key findings and short comments from me.
1. Business model needs to be updated
- In 72% of the surveys executives answered that their business model “will be under threat in the next five years.”
As a response to these changes it is important to understand current and new business challenges, as well as a company’s strengths and weaknesses. I’m not talking only about SWOT analysis, but about mobilizing the skills and experience of your team to map out the current situation and problems that your company deals with. It might be a top-view strategy map detailed down to the specific business objectives.
2. There is a problem with vertical alignment
Another interesting fact:
- “54% of respondents reported poor vertical alignment.”
In other words, the translation of the strategy from the top level down to the department level is not working well enough. Besides using the Balanced Scorecard framework, I’d recommend to have a look at the “Catchball” process from Hoshin Kanri, as properly implemented, it will reduce vertical alignment problems.
3. Choose a business tool for a strategy review
Balanced Scorecard as a strategy description and management tool is doing well. In November, 2013 I was writing about Executive’s toolkit based on the “Management Tools & Trends 2013″ report published by Bain & Company. Fresh data provided in the Palladium’s report confirms that Balanced Scorecard is in the list of the most used tools for strategy description. Here is what executives use:
- 61% SWOT
- 55% Financial Modeling
- 49% Balanced Scorecard
I guess these numbers might be tricky, as people tend to call Balanced Scorecard any KPI scorecard they have, but it is clear that it is on the executives’ radars.
As for the subjective perception of the Balanced Scorecard, it is scored high:
- 72% of the users of Strategy Map and Balanced Scorecard believe that the overall quality of their strategy is strong.
Companies with Balanced Scorecard are doing much better
According to the report the Balanced Scorecard is used by:
- 55% of high performers, and
- 7% of low performers.
Authors of the report conclude that “organizations using the Balanced Scorecard are 7.5 times more likely to be high performing.” As I commented to Palladium’s announce on LinkedIn, the cause-and-effect connection is not clear here. The Balanced Scorecard is used by these 55% high performers, but is not necessarily the reason for their high performance. Also, as it was told above, sometimes executives tend to call any scorecard a Balanced Scorecard, including ones that are focused on KPIs only.
Still, it is clear that those high performance care a lot about following a certain strategy execution scheme and that the Balanced Scorecard plays a significant role in this. I believe some part of their success can certainly be contributed to the proper usage of the Balanced Scorecard.
Recommendations for BSC Designer users
As far as I see it from the projects that our customers send to us, they are doing well. I saw projects with well developed KPIs and good strategy maps. Two recommendations that I’d like to give are:
- Don’t limit your strategy maps to the top level views only. It is necessary to add some meaningful description in the form of “two or three-page Word document” as strategy execution expert Jeroen De Flander suggests  or in the form of more detailed sub-maps, or both. With the recent update of the BSC Designer drawing and sharing process maps is now much easier.
- Connect your strategies and scorecards even more. Make sure all of the departments know your strategic priorities, know how to achieve them and how to measure their success (see the “Catchball” paragraph in  for specific recommendations). Technically BSC Designer supports this alignment, but there should be a shift in how executives deal with their strategies.
I’m open for further discussion of the report, conclusions that we can make from it, and best practices one can employ to be more effective in strategy description and execution.
- ^ “2014 Global State of Strategy and Leadership Survey Report”, http://event.thepalladiumgroup.com/about/thoughtleadership/Pages/WhitePapers.aspx Palladium Group, Inc.
- ^ Balanced Scorecard Guide, Jeroen De Flander, 2014, http://jeroen-de-flander.com/balanced-scorecard
- ^ “3 ideas western executives can learn from Hoshin Kanri” Aleksey Savkin, 2014, http://www.bscdesigner.com/3-ideas-from-hoshin-kanri.htm